Hanley Investment Group Arranges Sales of Three Single-Tenant Taco Bell Investments Totaling $7.4 Million, All at Record-Low Cap Rates

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KANSAS CITY & BETHANY, Mo. & WEST DES MOINES, Iowa – Hanley Investment Group Real Estate Advisors, a nationally recognized real estate brokerage and advisory firm specializing in retail property sales, announced today that the firm has arranged the sales of three, single-tenant net lease retail properties occupied by Taco Bell in the Midwest to three separate buyers. The combined value of the sales was approximately $7.4 million and traded at record-low cap rates. In the last 24 months, Hanley Investment Group has sold $400 million in retail properties in the Midwest.

“The demand for QSRs is at an all-time peak,” said Hanley Investment Group Executive Vice President Jeff Lefko. “Investors want COVID-resistant, recession-proof investments and there are no better examples than the drive-thru QSR. Not only are cap rates lower but the spread between corporate credit QSRs and franchisee credit QSRs is very little. Additionally, we are continuing to see the Midwest QSR cap rates compress to a level that we had only seen in the Western U.S.” 

Hanley Investment Group Executive Vice Presidents Lefko and Bill Asher, Senior Associate Beau Velten, alongside Managing Director Jeff Christian with First Street Brokerage, in association with ParaSell, Inc., represented the seller, a San Francisco Bay Area-based private investment company, in the sale of a new 2,053-square-foot Taco Bell building with a drive-thru built in 2020 on 0.68 acres at 5700 East Bannister Road in Kansas City, Missouri. The buyer was a private investor based in Springfield, Missouri and was represented by Brad Thessing of Thessing Commercial Properties of Fremont Hills, Missouri. The sale price, which could not be disclosed, represented the second-lowest cap rate for a single-tenant Taco Bell in Missouri in the previous 36 months, according to Lefko.

“Prior to the commencement of formally marketing the property for sale, we secured a 1031 exchange buyer from Southern Missouri as a result of cross-marketing from similar properties that were now in escrow and closed at 98% of the list price,” said Lefko. “The buyer liked that this Taco Bell location was operated by a successful franchisee, Diversified Restaurant Group, who owns over 230 restaurants across two brands, Taco Bell and Arby’s as well as the new, long-term, absolute triple-net lease, and its proximity to Interstate-435 freeway on-/off-ramp, other quick-service restaurants, retail and service businesses.”  

In Bethany, Missouri, Hanley Investment Group’s Lefko, Asher and Velten, and First Street’s Christian, in association with ParaSell, Inc., represented the seller, a San Francisco Bay Area-based private investment company, in the sale of a new 3,200-square-foot Taco Bell building with a drive-thru built in 2020 on 1.53 acres at 4132 Miller Street (U.S. Highway 136). The buyer was a family trust based in Central California and was represented by James Bitter of Fortune Associates of Fresno, California. The sale price, which could not be disclosed, represented the lowest cap rate for a fee simple Taco Bell in a tertiary Midwest market. The new construction property with an absolute triple-net lease traded at 99% of the list price, Lefko noted.

“We procured a Central California-based 1031 exchange buyer and negotiated a quick 15-day close,” said Lefko. “The tenant, Royal City Bell, LLC, is one of the largest Taco Bell franchisees and is an independently owned and affiliated entity of Diversified Restaurant Group. Royal City Bell had a 10-year operating history at this location and converted the building to Taco Bell’s new 2020 prototype with a new, long-term, absolute triple-net lease.”

Lefko adds, “This is a proven location with excellent freeway access and visibility to Interstate 35 including a new 100-foot pylon sign that was installed in 2020. I-35 is the primary interstate connecting Bethany to Kansas City and Des Moines, Iowa. The property benefits from the regional draw from the Walmart Supercenter, the only one in a 40-mile radius, and other retailers, services and QSRs at the same I-35 exit including McDonald’s, Dairy Queen, Casey’s, Kum & Go, and three hotels/motels.”

In West Des Moines, Iowa, Hanley Investment Group’s Lefko and Asher, in association with Scott Reid & ParaSell, Inc., represented the seller, a Kansas City-based private investor, in the sale of a long-term, absolute triple-net ground lease for a Taco Bell with a drive-thru at 1570 22nd Street. The 2,989-square-foot Taco Bell building, built in 2012, sits on an 0.87-acre pad at the newly renovated Westowne Center, which is anchored by Michaels and Floor & Décor. The buyer, a private investor based in Jackson, Wyoming, was represented by David Borinstein of Colliers International in San Francisco. The sale price, which could not be disclosed, represented a record cap rate for a single-tenant Taco Bell with a relatively short-term lease in Iowa, and traded at 99% of the list price, according to Lefko.

In late December, Lefko, Asher and Velten, along with First Street’s Christian, in association with ParaSell, Inc., arranged the sale of a single-tenant Taco Bell in Mission, Kansas. The sale represented one of the lowest cap rates in the U.S. in 2020.

“Taco Bell has become one of the most attractive net lease investment choices among QSRs,” said Lefko “We anticipate their cap rates will continue to compress over the next 12 months.”